6	International Theme Park Investments

The Company has a 51% effective ownership interest in the operations of Disneyland Paris, a 48% ownership interest in the operations of Hong Kong Disneyland Resort and a 43% ownership interest in the operations of Shanghai Disney Resort, all of which are VIEs consolidated in the Company’s financial statements. See Note 2 for the Company’s policy on consolidating VIEs.

The following tables present summarized balance sheet information for the Company as of September 29, 2012 and October 1, 2011, reflecting the impact of consolidating the International Theme Parks balance sheets.


	As of September 29, 2012
	Before International Theme Parks Consolidation		International Theme Parks and Adjustments		Total
Cash and cash equivalents	$	2,839	$	548	$	3,387
Other current assets		10,066		256		10,322

Total current assets		12,905		804		13,709
Investments/Advances		6,065		(3,342)		2,723
Fixed assets		17,005		4,507		21,512
Other assets		36,949		5		36,954

Total assets	$	72,924	$	1,974	$	74,898


Current portion of borrowings	$	3,614	$	—	$	3,614
Other current liabilities		8,742		457		9,199

Total current liabilities		12,356		457		12,813
Borrowings		10,430		267		10,697
Deferred income taxes and other long-term liabilities		9,325		105		9,430
Equity		40,813		1,145		41,958

Total liabilities and equity	$	72,924	$	1,974	$	74,898


	As of October 1, 2011
	Before International Theme Parks Consolidation		International Theme Parks and Adjustments		Total
Cash and cash equivalents	$	2,407	$	778	$	3,185
Other current assets		10,323		249		10,572

Total current assets		12,730		1,027		13,757
Investments		3,791		(1,356)		2,435
Fixed assets		15,386		4,309		19,695
Other assets		36,137		100		36,237

Total assets	$	68,044	$	4,080	$	72,124


Current portion of borrowings	$	2,866	$	189	$	3,055
Other current liabilities		8,459		574		9,033

Total current liabilities		11,325		763		12,088
Borrowings		8,800		2,122		10,922
Deferred income taxes and other long-term liabilities		9,507		154		9,661
Equity		38,412		1,041		39,453

Total liabilities and equity	$	68,044	$	4,080	$	72,124

The following table presents summarized income statement information of the Company for the year ended September 29, 2012, reflecting the impact of consolidating the International Theme Parks income statements.


	Before International Theme Parks Consolidation ⁽¹⁾		International Theme Parks and Adjustments		Total
Revenues	$	40,051	$	2,227	$	42,278
Cost and expenses		(31,321)		(2,094)		(33,415)
Restructuring and impairment charges		(100)		—		(100)
Other income /(expense), net		265		(26)		239
Net interest expense		(299)		(70)		(369)
Equity in the income of investees		647		(20)		627

Income before income taxes		9,243		17		9,260
Income taxes		(3,068)		(19)		(3,087)

Net income	$	6,175	$	(2)	$	6,173

⁽¹⁾

These amounts include the International Theme Parks under the equity method of accounting. As such, royalty and management fee income from these operations is included in Revenues and our share of their net income/(loss) is included in Equity in the income of investees. There were $46 million in royalties and management fees recognized in fiscal year 2012.

The following table presents summarized cash flow statement information of the Company for the year ended September 29, 2012, reflecting the impact of consolidating the International Theme Parks cash flow statements.


	Before International Theme Parks Consolidation		International Theme Parks and Adjustments		Total
Cash provided by operations	$	7,725	$	241	$	7,966
Investments in parks, resorts, and other property		(3,143)		(641)		(3,784)
Cash (used in)/provided by other investing activities		(2,745)		1,770		(975)
Cash used in financing activities		(1,408)		(1,577)		(2,985)
Impact of exchange rates on cash and cash equivalents		3		(23)		(20)

Increase in cash and cash equivalents		432		(230)		202
Cash and cash equivalents, beginning of year		2,407		778		3,185

Cash and cash equivalents, end of year	$	2,839	$	548	$	3,387

Disneyland Paris Refinancing

In September 2012, the Company provided Disneyland Paris with €1.3 billion ($1.7 billion) of intercompany financing, bringing the total financing provided to Disneyland Paris to €1.7 billion ($2.2 billion) as of September 29, 2012. Disneyland Paris used the new financing to repay its outstanding third-party bank debt. The Company recorded a net charge of $24 million on the repayment of the third-party bank debt. Certain of the financial and operating covenants, notably those related to capital expenditures and the payment of royalties and management fees due to the Company were eliminated.

The Company also previously provided Disneyland Paris with lines of credit totaling €250 million ($323 million) which bear interest at EURIBOR. €100 million ($129 million) expires in 2014 and €150 million ($194 million) in 2018. As of September 29, 2012, the line of credit has not been used.

Hong Kong Disneyland Resort Capital Realignment

In July 2009, the Company entered into a capital realignment and expansion plan for Hong Kong Disneyland Resort (HKDL) with the Government of the Hong Kong Special Administrative Region (HKSAR), HKDL’s majority shareholder. Key provisions of the plan include:

•

The Company converted its $354 million term and revolving credit facility loan to HKDL into equity during fiscal 2009. This was accompanied by conversion of an equal amount of the HKSAR loan to HKDL into equity.

•

The Company would make approximately $0.4 billion of equity contributions to fund HKDL during the expansion, which is currently scheduled to be completed in phases by 2013. The actual amount of equity contributions by the Company may differ depending on the actual final cost of the expansion and operating results of HKDL during the relevant timeframe. The HKSAR will convert an additional amount of its loan to HKDL equal to these contributions into equity, subject to a maximum conversion amount that would leave approximately HK $1.0 billion ($129 million at September 29, 2012 exchange rates) of the HKSAR loan to HKDL outstanding. At September 29, 2012, the HKSAR loan to HKDL was $267 million. Through fiscal 2012, the Company has made equity contributions totaling $0.3 billion and HKSAR has converted an equal amount of its loan to HKDL to equity. The Company does not currently anticipate making additional equity contributions related to the capital realignment and expansion plan.

As a result of the above arrangement, the Company’s interest in HKDL has increased from 43% to 48%.

Shanghai Disney Resort

On April 8, 2011, the Company and Shanghai Shendi (Group) Co., Ltd (Shendi) announced that the Chinese central government in Beijing had approved an agreement to build and operate Shanghai Disney Resort through a joint venture between the Company and Shendi, in which Shendi owns a 57% interest and the Company owns 43%. Shanghai Disney Resort is currently targeted to open by the end of calendar 2015. The project will be constructed in phases, and we expect the total investment to be approximately 24.5 billion yuan to build the theme park and an additional 4.5 billion yuan to build other aspects of the resort, including two hotels and a retail, dining and entertainment area.